Supply Chain Transformation

Supply Chain Transformation

To remain competitive, companies need to become more collaborative along the entire supply chain. IIoT and cloud technologies can enable this.

Once we accept that the real competition happens at the supply chain level, it becomes obvious that having a perfectly organized, tuned and efficient supply chain is mandatory. At the plant level, there are several aspects that can determine performance. But at the supply chain level, one single aspect is more important than anything else: collaboration.

Strong collaboration between sales and supply chain, suppliers and a company—and every day more frequently even between customer and supplier—is critically important to beat the competition. No matter how clear this fact may be, achieving an effective collaboration has always been extremely difficult. Every link in the chain has different immediate goals and objectives.

The sales team wants unlimited stocks of products in order to have no limits in increasing sales. The supply chain group is more interested in inventory turns and does not get measured on sales. Suppliers want to maximize their prices and minimize their inventory costs while also getting recognition for its short lead times and low prices. Technology helps facilitate the exchange of real-time information and enable digital transparency, but it’s not enough to solve this natural and embedded conflict.

What can really drive a change in the behavior are new common metrics driven by common and shared real-time information. The digital supply chain requires collaboration with a purpose to a higher level. Correspondingly, it is necessary to define business metrics that measure collaboration and drive operational performance both inside and outside any company. Like any measure to be effective, it must be based on real data. But in this case, they have to be recognized as meaningful and “true” along the whole collaboration chain (and many times it’s still difficult to get people to agree on KPIs inside the same company).

Identifying the right measures is not an easy task. But even more complex is creating a “single system” of systems that run on different technologies from different technological ages at different speeds. It’s easy to understand that if silos of information were dangerous when looking at a single company, they are totally unacceptable when looking at the whole supply chain.

In this scenario, each part of a supply chain needs to plan and prioritize its investments and strategic initiatives in order to become an enabler of the collaboration. This is the reason why some technologies are becoming increasingly popular and accepted even by companies that were initially skeptical—they are simply the only way to make it happen.